Malaysia economy grows at fastest pace in two years

Malaysia’s Central Bank Governor Muhammad Ibrahim shows a copy of a report showing the first-quarter GDP growth results at the Bank Negara offices in Kuala Lumpur on May, 19, 2017. Malaysia’s economy grew at its fastest pace in two years during the first quarter, the central bank said on May 19, boosted by stronger domestic demand and a pick-up in exports. / AFP / Mohd RASFAN

KUALA LUMPUR: Malaysia’s economy grew at its fastest pace in two years during the first quarter, the central bank said yesterday, boosted by stronger domestic demand and a pick-up in exports. Southeast Asia’s third-biggest economy expanded 5.6 percent on-year in January-March period, compared with 4.1 percent in the same period last year and 4.5 percent in October-December. The result-much better than the 4.8 percent forecast in a survey by Bloomberg News-marks the third consecutive quarter of improving growth and is the fastest since the start of 2015.

“It’s a lot stronger than expected and it was partly due to a rebound in exports and commodity prices,” said Song Seng Wun, an economist at CIMB Private Banking. Bank Negara said growth would be sustained this year as the global economy showed signs of improvement, while domestic demand remained healthy. “The economy is on track to register higher growth in 2017,” Bank Negara said via a statement. “Domestic demand is projected to continue to expand. Exports are expected to benefit from the improvement in global growth.”

The figures come after export-reliant Malaysia recovers from years of falling oil prices and weak overseas demand. The economy is forecast to grow 4.3-4.8 percent this year but Bank Negara said in March that rising protectionism remains a risk. Growth hit 4.2 percent last year, slowing from 5.0 percent in 2015 and 6.0 percent in 2014.

Renegotiation of TPP needed

Meanwhile, some renegotiation of the Trans Pacific Partnership (TPP) trade deal would be needed if it is to move ahead without the United States, Malaysian Trade Minister Mustapa Mohamed said on Friday. However, he told Reuters in an interview that a bigger priority for Malaysia at the moment was completing negotiations on the China-backed trade deal for Asia, the Regional Comprehensive Economic Partnership (RCEP).

“We are open, we remain committed to TPP. I am being realistic – without the US, this will change the game altogether… There would have to be some renegotiation,” Mustapa said. “First priority is RCEP for us,” he said. He was still optimistic that the United States would eventually rejoin TPP, which was ditched by US President Donald Trump. Discussions on both the TPP and RCEP deals are taking place in Hanoi, Vietnam, on the sidelines of a meeting of trade ministers from Asia Pacific-Economic Cooperation countries. – Agencies